South Korea crypto market slows down after rapid growth
South Korea’s crypto trading volumes fall as retail traders retreat in Q1 2025.
South Korea’s crypto market saw declining momentum in the first quarter of 2025, following an explosive rally in late 2024.
According to a new report by blockchain analytics firm Kaiko, daily volumes peaked at $300 million in Q4 2024, but cooled significantly in early 2025.
The decline mirrored a broader slowdown across centralized exchanges worldwide, with South Korean traders shifting away from altcoins toward Bitcoin during heightened volatility.
The market downturn was triggered in part by political instability following December’s martial law crisis, as well as global macroeconomic pressures tied to U.S. tariff escalation. South Korea’s traditionally retail-driven trading landscape responded by scaling back exposure to riskier assets. Traders fled stablecoins in favor of Korean won (KRW) pairs, leading to reduced fiat liquidity and a decline in trading depth.
KRW remains a dominant fiat in crypto markets, accounting for 37% of global fiat-to-crypto volume—down from an average of 40% in 2024. However, the country’s reliance on centralized exchanges and limited use of stablecoins have contributed to higher price premiums and lower depth, especially during periods of market stress.
Institutional access could reshape liquidity and market depth
While retail activity still dominates, the potential introduction of institutional investors into South Korea’s crypto ecosystem may mark a turning point. Kaiko notes that local regulators are considering rules that would allow larger financial entities to participate in digital asset trading, a move that could improve liquidity and stabilize price discovery.
Currently, trading remains concentrated on major platforms, with Upbit commanding a 70% market share and Bithumb trailing at 28%. Upbit alone posted $300 billion in trading volume in Q1 2025, surpassing global platforms like KuCoin and Kraken. Yet the country’s market share of global crypto trading fell from 7% to 3%, as U.S. exchanges absorbed most of the post-election volume surge.
Institutional participation could help rebalance South Korea’s altcoin-heavy market, where tokens like WEMIX and WAVES still rely on local demand for liquidity. Increased oversight and broader investor profiles may also mitigate the effects of retail-driven volatility and promote a more resilient market structure.
Recently we wrote that South Korea’s Financial Services Commission (FSC) has escalated its efforts to curb unregistered digital asset operators by ordering the blockage of 14 crypto exchange apps on the Apple Store.
